TMI Blog1969 (7) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... eve justice and that to require additional steps would not frustrate the apparent purpose of the legislation. In the great majority of cases which come before this tribunal all the relevant facts are known to the taxpayer and he has a full opportunity to set out in his statutory declaration all the facts which he thinks are relevant and also all arguments on which he relies. The only advantage to him of having a right to see and reply to the counter-statement of the commissioners would then be that he could reply to their arguments. If the tribunal were entitled to pronounce a final judgment against the taxpayer, justice would certainly require that he should have a right to see and reply to this statement, but all the tribunal can do is to find that there is a prima facie case against him. It is, I think, not entirely irrelevant to have in mind that it is very unusual for there to be a judicial determination of the question whether there is prima facie case. Every public officer who has to decide whether to prosecute or raise proceedings ought first to decide whether there is a prima facie case, but no one supposes that justice requires that he should first seek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h counter-statement before proceeding to a determination. Was that in all the circumstances unfair ? In the careful address of counsel for the appellants we were referred to many decisions. I think that is was helpful that we should have been. But ultimately I consider that the decision depends upon whether in the particular circumstances of this case the tribunal acted unfairly so that it could be said that their procedure did not match with what justice demand. It is important to have in mind exactly what the tribunal had to do. There was no question of their being required to come to a determination as to whether section 28 applied to the appellants in respect of the transactions in question. There was to be no decision comparable to that in Rex v. Housing Appeal Tribunal [1920] 3 K. B. 334. The decision or determination that the tribunal had to make was whether there was or was not a prima facie case for proceeding in the matter. That was a most limited decision. A decision that there was such a case would mean that it could not be said that the commissioners must definitely not give a notice under sub-section (3) because they would certainly be wrong if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about his affairs, will have been able to set out fully why he considers that section 28 does not apply. If the tribunal follows the course that Parliament has defined and decides not to extend that course I do not think that by reason of that circumstances alone it should be held that they have acted unfairly. I would dismiss the appeal. LORD GUEST.-My Lords, I have had the advantage of reading the speech of my noble and learned friend Lord Donovan, with which I agree. I have only a few observations of my own to make. Where a question arises as to whether the principles of natural justice should be followed in any particular case it is important, in my view, that the principles upon which this question is to be decided should be reasonably clear and definite. Inferior tribunals should be in a position to know whether, in any particular case, they were called on to apply the principles of natural justice and to what extent those principles should be followed. It would be unsatisfactory if cases where statutory tribunals had been set up were to be decided ex post facto upon some uncertain basis. It is reasonably clear on the authorities that where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view, be followed as a matter of principle. For the appellant it was contended that in the case where the tribunal was entrusted with the decision of a preliminary point which affected parties' rights the principles of natural justice in their full vigour must be employed. Your Lordships were urged to adopt the dissenting judgment of Salmon L. J. in Cozens. The true view, in my opinion, is that expressed by Tucker L. J. in Russell v. Duke of Norfolk .[1949] 1 K. B. 109, 118. There are, in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used, but, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case. In the present case I can see nothing manifestly unfair about the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in my opinion, give the taxpayer a sufficient opportunity of stating his contentions to the tribunal and there is nothing so unfair about the procedure as to entitle the court to say that the principles of natural justice were not followed. For these reasons I would dismiss the appeal. LORD DONOVAN.-My Lords, this appeal arises out of the provisions of section 28 of the Finance Act, 1960, which is intended to cancel tax advantages from certain transactions in securities. Where the circumstances defined in the section exist, and a person obtains a tax advantage in consequence of a transaction in securities, or is in a position to do so, then the Commissioners of Inland Revenue may cancel it by an assessment to tax, or by nullifying a right to repayment of tax, or the requiring of the return of a repayment already made, and so on. These consequences are not to follow, however, if the taxpayer shows that the transaction was carried out for bona fide commercial reasons, or in the ordinary course of making or managing investments, and that the obtaining of a tax advantage was not a main object, or one of the main objects, of the transaction. Section 29 of the same Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to cancel the tax advantage. (See section 28(3)). Against these there is a right of appeal to the Special Commissioners, a further right of appeal by way of re-hearing by the aforesaid tribunal, and a right of appeal to the High Court by way of case stated on a point of law (section 28(6), (7) and (8)). Where the tribunal finds, on consideration of the three documents mentioned above, that there is prima facie case for proceeding, they are not obliged under any express provision of the section so to notify either the commissioners or the taxpayer. But they must obviously do so, and this matter is covered by their own rules. Likewise the commissioners are under no express statutory obligation to tell the taxpayer that they intend to submit a counter-statement to the tribunal, but their usual practice is to inform him when this has been done. In the present case the taxpayer's solicitors were informed of the commissioners' intention to seek a finding from the tribunal as to the existence of a prima facie case for proceeding ; and they asked for a copy of any counter-statement which the commissioners intended to send to the tribunal. The commissioners replied t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng summons disclosed no cause of action and should be struck out. In the Court of Appeal the appellants abandoned their claim to an oral hearing by the tribunal. Before your Lordships it was agreed that the question to be decided should not be whether the originating summons should have been struck out, but that the substantive issue should be decided, namely, whether the rules of natural justice required that the appellants should see any counterstatement of the Commissioners of Inland Revenue, and be entitled to reply to it, and have their reply taken into consideration by the tribunal. This issue must be decided by considering section 28 and its purpose as a whole. I start by adopting the words of Lord Tucker in Russell v. Duke of Norfolk [1949] 1 K. B. 109, which I think are in point. He said, at page 118 : There are, in my view, no works which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter which is being dealt with and so for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... safeguard given to the taxpayer by this preliminary procedure should develop into something like a round-by-round contest conducted on paper. I think that by specifying three documents only, it was intended that these three documents only were the ones to be considered by the tribunal at this stage. All the issues would be open, and each sides' documents submitted to the tribunal would be available at the subsequent appeal hearings if any took place. Moreover, any unfairness to the taxpayer in his not seeing the counterstatement before it is considered by the tribunal is, in my view, more apparent than real. In view of the complexity of fiscal legislation, transactions which have a tax advantage in view, whether as a main object or not, have to be planned with considerable care and usually with professional assistance. It is well known to the taxpayer or his advisers what has to be done and when ; and if other persons are to play a part, just what they have to do and when ; and what tax advantage is expected to accrue, and when. The taxpayer or his adviser will also have a fairly shrewd idea where any weaknesses of the scheme lie in relation to section 28, and, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible for a member of the tribunal to sit even though he had advised the taxpayer in the particular transaction under scrutiny. Nor, on careful reading of the judgments in the Court of Appeal do I think that they take any such short cut to a decision. For myself I agree with their conclusion that reading the section as a whole it is clear that Parliament intended the three specified documents to be considered by the tribunal at this preliminary stage, and those three documents alone ; and I reach this conclusion bearing in mind the full rights of appeal against subsequent proceedings which the section confers ; and also the further consideration which I have mentioned above. I do not myself think that the previous practice with regard to the somewhat similar procedure regarding sur-tax introduced in relation to the Board of Referees in the Finance Act, 1927, is of any assistance here. In the Finance Act, 1928, a different procedure was introduced involving the Special Commissioners of Income Tax instead : and, for reasons which are here immaterial, became much more popular with sur-tax payers. My recollection is that thereafter the right to go to the Board of Referees under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproach which merely takes the relevant statutory provision (Finance Act, 1960, section 28 (4)), subjects it to a literal analysis and cuts straight through to the conclusion that Parliament has laid down a fixed procedure which only has to be literally followed to be immune from attack. It is necessary to look at the procedure in its setting and ask the question whether it operates unfairly to the taxpayer to a point where the courts must supply the legislative omission. I echo the well-known language of Byles J. in Copper v. Wandsworth Board of Works 14 C. C. (N. S.) 180, 194. I need not restate the numerous authorities in which the general principle has been affirmed. The strength and pervasiveness of them have been asserted and reasserted by decisions, English, Australian, Canadian and South African which were cited at the bar. I confine myself to three points particularly emphasised in the present case. First, it is clear that the question, how far the general principle is to be carried, is a relative one. A striking example of this is In re K. (Infants) [1965] A. C. 201 where this House had to decide whether, in infancy proceedings, confidential reports obtained by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order made against him. The decision on which the respondents mainly relied, In re Hammersmith Rent-Charge [1849] 4 Ex. 87, so far from supporting an argument that orders, of an interim kind, may normally be made ex parte, shows to me the contrary, since all the learned judges, though differing in their ultimate conclusions, proceeded on the basis that ex parte procedure was only tolerable if, in one way or the other, the party affected had a way open to him to have any order set aside. On this point there are two other decisions of relevance. On the side of the respondents, Cozen's case [1966] 2 Q. B. 330 was invoked to show that an order, vitally affecting a party's interest, may be made ex parte if the relevant Act of Parliament so requires. I must say that I find great force in the dissenting judgment of Salmon L. J. but whether that judgment is to be preferred or not as to cases arising under the Limitation Act, 1963-a matter which must be left open-I cannot find in the majority decision on that unsatisfactory statute a principle to be extended to such a case as the present. The appellants' strongest case was Rex v. Housing Appeal Tribunal [1920] 3 K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otify the taxpayer that they have reason to believe that the section may apply to him in respect of a transaction or transactions. These must be specified in the notification, but no doubt this may be done in very general terms-in the present case we find a reference to all other transactions of whatever description relating thereto. Then the taxpayer may make a statutory declaration stating the facts and circumstances on which he bases his opinion that the section does not apply and sends this to the commissioners. It is then for the commissioners to decide whether they wish to proceed, and if so they send to the tribunal a certificate to that effect with the statutory declaration and, if they wish, a counter-statement. This may contain fresh facts, or arguments of law, or both. The question to be answered, in my opinion, is this : is it fair that the tribunal should decide on this material : or, in the interests of natural justice or fairness, ought there to be read in a requirement either to allow the taxpayer an opportunity to see and answer the counter-statement, or, perhaps and, to allow him some kind of hearing. Thus, this is not a case where the court has to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tribunal. I would, therefore, think them empowered, if in any case where they are exercising their function under sub-section (5) they consider exceptionally that material has been introduced of such a character that to decide upon it ex parte would be unfair, to take appropriate steps to eliminate that unfairness. I do not think the rules need be formulated or procedures laid down. The tribunal can deal with these exceptional cases as they think best and I have no doubt that they will have in mind that justice to the revenue requires that, since a decision one way is conclusive, the revenue ought to have the last word. In reaching the above conclusion I have not been influenced by the procedure said to have been followed over many years by the Board of Referees established with a similar jurisdiction under similar statutory language. There may have been good reasons why taxpayers never insisted on a right to a hearing before this board, or to see the revenue's statement, in connection with the surtax assessments to which the board's jurisdiction related-in fact, for reasons into which I need not enter, the whole procedure of recourse to the board was l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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